One of the major advantages of doing business in Canada is the opportunity to move the whole family to one of the most developed and influential countries in the world, to open a successful business with full support of the government and private investors. After 5 years of permanent residence and operation of the company in the country, the entrepreneur and his close relatives have the right to obtain the status of a Canadian citizen.
Not only Canadian citizens, but also permanent residents and even foreigners can open a business in the country. The government’s loyal policy of supporting small and medium-sized businesses creates extremely favorable conditions for relocation. Learn about the types of businesses that foreign nationals can open in Canada to make a profit and obtain citizenship status.
Unlike Canada, where business registration is simple but requires strict compliance with tax regulations, many European countries have simplified tax regimes, government support for small businesses, and favorable programs for start-ups. Learn more about registering a business in Europe.
Canadian business climate
The country has a stable economy and a constantly growing GDP per capita. In 2024, the figure stands at 55,530 USD.
The main advantages of starting a business in Canada for foreigners:
- Flexible tax system. The government is keen to encourage entrepreneurship, so the tax rate varies by region (from 10% to 38%), for large and small companies, considered one of the lowest in the world.
- Opportunity to immigrate to Canada. Business owners in the country have the right to apply for citizenship, as long as they have permanent residency in Canada.
- Programs available from both the government and the private sector. Even novice entrepreneurs can find a way to get a grant or financial assistance to start a business.
- Qualified workforce. There are about a hundred prestigious universities in the country, which annually educate a number of specialists in various fields. In addition, the Canadian market constantly attracts professionals from other countries, giving them the opportunity to work for the benefit of the country. This is an opportunity to start your own business with experienced professionals in your field.
There are some disadvantages to starting a business in Canada. Some industries (construction, food) require special licenses or proof of professional qualifications according to government standards (medicine). These procedures can delay the start of a business for a year or more.
Canadian business structures
There are three general types of business in Canada, depending on the size of the company and the number of employees. Each type has its own tax rate and accounting form.
Sole proprietorship (SP)
The business is registered to an individual who is the sole beneficiary, takes the profits from the business, and makes the decisions. If the company has a loss, it may be covered by income from another business. This is why most sideline businesses are SPs.
Suitable for:
- Freelancers working from home;
- Professionals in the IT sector;
- Owners of small online shops.
Entrepreneurs make regular contributions to the pension fund, pay annual tax and can apply for benefits and allowances from the government insurance system.
Partnership
A form of business activity based on an equal partnership of two or more individuals, separate companies, or corporations that join forces in a single endeavor. The owners draft a partnership agreement that outlines their respective powers, ownership interests and capital contributions, as well as profit sharing and operating procedures for the business. Taxes on such a partnership are paid by its members in the same percentage as the allocation of expenses and income. Each partner includes the Partnership’s profits in its annual reports and pays taxes according to its type of business (corporation or SP).
Corporation
The biggest business structure that can bring together large companies, partnerships and sole proprietors. A corporation is registered as a separate legal entity. Members of a corporation may change, however, the overall policy and status of the business is not affected. The corporation is created for large production facilities (factories, pharmaceutical companies), logistics and IT companies.
Starting a business in Canada
A foreign entrepreneur planning to start a business in Canada must complete 6 mandatory steps before registering a business:
- Business idea. The future entrepreneur needs to assess his skills, experience and strengths in opening a business in Canada. After thoroughly analyzing their ideas, developments and plans, they should decide on the type of product or service, target audience and logistics.
- Business plan. This written document includes a market analysis, features of the product or service that distinguish it from the competition, marketing strategy and financial calculations. The business plan represents the company to creditors, partners and migration services.
- Structure choice. At this point, the structure for business activity is selected (SP, partnership, corporation), which determines the tax rate.
- The entrepreneur has to choose the level of registration of his company: the business activities will be carried out in one province or in the whole country (federal). The search for rented premises, if necessary, is important.
- Business name. A unique name for the company may be chosen by oneself, checking each option in advance in the database of trademarks in Canada. There are also separate companies that offer their assistance in registering the name. For SP, the entrepreneur’s name is applied.
- If the business is based on selling a unique service or product, the entrepreneur may need to register a patent or copyright. Before starting a business, protecting your ideas is important.
Citizenship, residence permit or business relocation worldwide
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How to register a company in Canada
You can file a new company in a Canadian jurisdiction remotely. The company registration must be done directly by the owner or an authorized person using a RepID or GroupID. These are special identifiers that act as a power of attorney when signing documents to form a new company.
- Register with the Canada Revenue Agency to obtain a business number.
- Obtain a Social Insurance Number for the business owner.
- Submit documents and a completed business plan online to the Ministry of Industry and pay the government fee of CAD 200-250.
- Open a bank account for the business.
- Submit documents to the provincial tax authorities.
- Obtain a license or permits for a specific type of business activity, if required to do business in a particular province. You can check the requirements for each Canadian city’s business zone on the BizPaL website.
Business taxes in Canada
Among the G7 countries, Canada has the most favorable tax environment for small and large businesses. The tax rate depends on the type of business and its operating level:
- VAT – federal rate is 5%, provincial rate is about 5-15%.
- Income tax depends on the amount of income. Up to CAD 55,900 – 15%, over CAD 200,000 – 33%.
Tax rates vary in different provinces of the country where the company is registered.
| Province | VAT rate, % |
|---|---|
| Alberta | 5 |
| British Columbia | 5 |
| Manitoba | 5 |
| New Brunswick | 15 |
| Newfoundland and Labrador | 15 |
| New Scotland | 15 |
| Ontario | 13 |
| Prince Edward Island | 15 |
| Québec | 5 |
| Saskatchewan | 5 |
The provincial rate may vary depending on the income level. You can calculate the VAT for each province in greater detail using the calculator on the Canadian government’s website.
For comparison, the VAT in Russia, Ukraine and Belarus is 20%. In Europe, the VAT rate is slightly different: Germany – 19%, Greece – 24%, Sweden – 25%.
How to buy a ready-made business in Canada and does it pay off?
For an entrepreneurial newcomer, acquiring a ready-made, working business in one of Canada’s provinces is much easier. According to a BDC study, entrepreneurs who expand their businesses by buying or incorporating ready-made businesses experience twice the revenue growth of those who start from scratch.
How to buy a ready-made business in Canada:
- Choose a niche. Business experience is considered a key factor in choosing a particular industry for a company. For example, if a businessman has been in the service industry for several years, he should look for the same industry in Canada. Not only will this increase the chances of buying a profitable business, but it will also help in getting a loan from one of the local banks.
- Find a broker. In Canada, real estate, land and businesses are sold through a broker. The broker adds a 10-12% commission to the price. Originally, there is an opportunity to contact the broker remotely, but most professionals wait for the buyer to arrive in Canada.
- Analyze and choose one of the suggested options. Once the buyer has decided to purchase one of the companies, the broker will offer to sign a confidentiality agreement and show all the documents requested by the future owner of the company. Independently or with the help of specialists, the financial statements and credit history must be reviewed to ensure that there have been no arrests and, generally, assess the liquidity of the purchase. If during the process it turns out that there are certain issues, which are not indicated in the broker’s data, the company’s value can be reduced.
- Sign the agreement. After all the possible reviews and verifications, a contract will be drawn up stating the total value of the company. There is no need to pay the whole amount at once, most sellers offer installments on individual terms.
Pros of buying a ready-made business in Canada:
- The buyer gets a working business along with a base of suppliers, premises, employees;
- The time from buying a business to receiving the first profit is a lot shorter than when starting a business;
- An existing business already has a certain client base.
Cons of buying a ready-made business:
- A functioning company is much more expensive than registering a new company;
- To buy a company in Canada, an entrepreneur must be a legal resident of Canada.
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Loans for entrepreneurs
Many foreign small business owners in Canada actively use the services of local banks such as Royal Bank of Canada and Bank of Montreal. These institutions offer flexible loan terms to both local and foreign entrepreneurs.
The Business Development Bank of Canada provides loans to young entrepreneurs between the ages of 18 and 29 for business start-ups. Canada Small Business Financing provides government loans to owners of all types of small businesses, except agricultural enterprises. The institution grants loans for up to 10 years if the annual income does not exceed CAD 5 million. The interest rate is 2-3%.
What is the best business to start
The choice of a business sector in Canada is the first task of a foreigner who wants to start a new enterprise in a new country. There are several ways to do this:
- Open a business that the businessman has been successful in his home country;
- Buy a franchise of a well-known brand and invest funds according to a pre-calculated business plan;
- Buy a ready-made business.
According to Statistics Canada there were 1,143,610 privately owned businesses with one or more employees in 2023. 37% of the businesses are located in Ontario, 20.9% in Quebec and 15.5% in British Columbia. Statistics Canada’s rankings include a study of the fastest-growing companies with annualized employee growth of more than 20% by industry over a three-year period.
Ranking of the business industries according to the number of high-growth companies:
| Industry | % |
|---|---|
| Construction | 15,9 |
| Professional, scientific and technical services | 11,5 |
| Manufacturing | 10,2 |
The data reflect the full potential of companies operating in the construction, service and manufacturing industries. In the last 3 years they have been able to increase the number of employees by an average of 60%.
Business immigration to Canada
Canada offers several business visa immigration options for CIS citizens and other foreigners, including the federal (Self-employed Persons and Start-up Visa Program) and Quebec provincial (Quebec Entrepreneur Program, Quebec Self-Employed Worker Program) programs. Each of the Canadian provinces also has its own projects that allow businesspersons to immigrate.
The process of establishing a business in Canada requires entrepreneurial experience and knowledge of Canadian law. Without a professional team of immigration specialists, starting a business in the country will not be easy.
However, with , it becomes much easier to move to Canada and organize a successful business.
Once all requirements are met, the applicant is entitled to a residence permit and after five years of permanent residence in the country, can apply for Canadian citizenship with the corresponding rights and privileges.
To immigrate, entrepreneurs must submit a letter from a foundation, private venture investor or business incubator that supports the foreigner’s business idea and will invest a certain amount of money in it. In addition, the immigrant must submit a copy of a CELPIP G-Test, IELTS, TEF Canada or TCF Canada language test result from an IRCC-approved agency. The entrepreneur must have money to live in the new country. The minimum amount required increases depending on the number of family members of the immigrant. The primary applicant must have USD 27,514, a spouse must have USD 34,254, and a family of four must have USD 51,128.
Canada is very enthusiastic about inviting successful entrepreneurs with new ideas who are willing to invest their money for the benefit of Canadians and create jobs. For ambitious CIS businessmen this is a chance to open a business in one of the world’s most developed and economically stable countries, and for their families to move to one of the countries with the highest standard of living, ecology and well-being.
